Overview
The English Premier League is among the most popular football leagues in Europe and across the world. Different teams in the Premier League have many fans in England and across the world. In addition to the attractive football, the other element that is characteristic of English football is the high turnover of managers. Despite the cost associated with dismissing managers before the completion of the term, teams in the English Premier League have a history of dismissing managers for various reasons despite the cost implications. For instance, Liverpool Football Club had to part with six million pounds sterling to dismiss Rafael Benitez in 2010 (Herbert, 2010). When Luiz Felipe Scolari was dismissed by Chelsea Football Club in 2009, the club compensated him with 12.6 million sterling pounds for the early dismissal (Fifield, 2010). Jose Mourinho also received a compensation package worth 18 million sterling pounds for his early dismissal in 2007 (Burt, 2007).
While those are the headline statistics involving the big clubs in the English Premier League, Bell, Brooks & Markham (2013, p.19) finds that the trend of high manager turnover is not characteristics of the football clubs at the helm of the league table in the English Premier League. More precisely, Bell, Brooks & Markham (2013, p.19) find that since the inception of the English Premier League to 2009, only four managers in the league had managed their respective clubs for a period exceeding three years. These include Rafael Benitez who had managed Liverpool Football Club for four and half years, David Moyes who had managed Everton Football Club for seven years, Arsene Wenger who had managed Arsenal Football Club for twelve years and the long-serving manager of Manchester United Football Club; Sir Alex Fergusson who had managed the club for twenty-two years as of 2009 (Bell, Brooks & Markham, 2013, p.19).
Bell, Brooks & Markham (2013, p.19) also finds that the high manager turnover is not just limited to the English Premier League or the game of Soccer. Coaches in various sports teams in the United States are also dismissed at a high rate. The managers in the National Basketball Associations, the National Football League, the Major League Baseball, and the National Hockey League managed clubs for 2.44 years on average between 1987 and 1992 (Bell, Brooks & Markham, 2013, p.19) This implies that on average the teams in these sport franchises had to change their managers every 2.44 years. While the dismissals are based on various reasons; chief of which is a string of dismal performances, there is a need to determine whether there is a relationship between the high manager turnover and the performance of the teams and the nature of the relationship.
Review of the Literature
Effect of Manager Turnover on the Team Performance in the Italian Serie A
Bell, Brooks & Markham (2013, p.19) reported that the trends in high manager turnover is not exclusive to the English Premier League. This is true considering other studies that have focused on the turnover of managers of football clubs in other leagues. De Paola & Scoppa (2012) performed a study in which he sought to determine the effects that the turnover of managers of football clubs in the Serie A (the Italian league) had on their performance. De Paola & Scoppa (2012) used the results of the league to determine how the change of the managers affected the performance of the team.
De Paola & Scoppa (2012) compared teams with similar characteristics that faced similar alternatives and also controlled the analysis for the “Ashenfelter dip” (Heckman & Smith, 1999, p.314). This was achieved by employing different econometric strategies. One of the strategies was the matching estimator, and the other was estimating the team-season fixed effect models. When the estimates of the team-season fixed estimates were analyzed, De Paola & Scoppa (2012) found that the dismissal of the coach and hiring another does not result an improvement in the performance of the team. However, the researchers found an exception in the effect of changing football managers on the performance of the team. De Paola & Scoppa (2012) found that the tally of goals scored increased when the managers were changed. When the researchers analyzed the matching estimates, they found that the change of the football manager did not have a positive effect on the performance of the team.
This was the trend even when the De Paola & Scoppa (2012) considered different variables. For instance, the researchers found that the change in the football manager did not result in the improvement of the points earned per match. The researchers also found that the change in the football manager did not result in an increase in the goals scored per match or the reduction in the goals conceded per match (De Paola & Scoppa, 2012).
Effect of Manager Turnover on the Team Performance in Major League Baseball
Other researchers have also explored the effect of manager dismissal in other sports and other leagues. Talentowski (2010, p.61) performed a study in which he sought to determine the cause and effect of the change of managers on the performance of the team by performing a case study of the Major League Baseball. Talentowski (2010, p.61) hoped to determine the reasons for the manager turnover in sports and the effect that the turnover had on the performance of the team after the departure.
The hypothesis that Talentowski (2010, p.61) tested was that the dismissal of the managers was due to a string of poor performances. Based on this hypothesis, the appointment of a new manager to replace the one dismissed should result in an improvement in the performance of the team. However, Talentowski (2010, p.61) finds that the decision by the management to dismiss managers due to the poor performance of the team is myopic. This approach fails to consider that there are other factors that are beyond the control of the manager that contribute to the poor performance of the team. Talentowski (2010, p.61) challenged the belief in the football fans and the executives of the football club that hiring a new manager will result in an immediate improvement in the winning percentages of the team.
Talentowski (2010, p.61) performed various statistical tests among which was multiple regressions. On average, Talentowski (2010, p.61) found that on average, managers are dismissed whenever their teams are performing poorly. The analysis on the impact of changing a manager on the performance of the team showed that the effect was not statistically significant. On average, Talentowski (2010, p.66) found the mean percentage wins for a team that did not change the manager in an entire season compared to those teams that changed their managers within the course of the season did not differ significantly.
This implies that the appointment of new managers did not improve the winning percentage of a team that was performing dismally before the dismissal of the manager. Talentowski (2010, p.66) also compared the performance of the team after the appointment of the new manager with his predecessor. The researcher found that the new managers improved the performance of the team on average compared to the dismal performances of their predecessors.
Even so, the researcher still found that the teams that posted a dismal performance even after the appointment of new managers posted a large margin of poor performance compared to the teams that saw an improvement in their performance after the appointment of the new manager (Talentowski, 2010, p.66). This finding the need to determine the number of wins that would result in a significant improvement in the findings to accurately describe the effect of effect of manager turnover on the performance of the team (Talentowski, 2010, p.66).
A further analysis of this finding showed that whether the change in the proportion of wins to losses and draws in the games following the appointment of a new manager was positive or negative, it was not statistically significant (Talentowski, 2010, p.66). The implication of this finding is that the turnover of managers does not result in an improvement in the performance of the teams in Major League Baseball. Having generated these findings, the researcher discussed other variables intrinsic to the team that might contribute to the poor performance of the team that even the appointment of a new manager cannot solve. The researcher also advanced another hypothesis to explain the turnover of managers whenever the team performs poorly.
One of the hypotheses advanced was the scapegoat hypothesis. This hypothesis is based on the understanding of the importance of the fans to the performance of the team. When a sports team records a string of dismal performances, there is apathy among the fans which might result in waning support for the team. This also an effect on the financial performance of the team because many sports teams rely on the stadium ticket sales as a revenue stream. The club executives might result in dismissing the manager as a scapegoat (Talentowski, 2010, p.66). The dismissal of the underperforming manager and the appointment of a new manager help settle the fans of the club. However, this is dangerous to the long-term performance of the club especially if the underlying issues that affect the performance of the team are not addressed (Talentowski, 2010, p.66).
Effect of Manager Turnover on the Team Performance in Colombian Professional Soccer League
The analysis of the effect of manager turnover on the performance of the team in other professional soccer league shows the same trends. Giraldo, Mendoza, Rosas & Tellez, (2013, p.1) performed a study in which they analyzed the effect of manager turnover on the performance of teams in the soccer league in Columbia. The data used by the researchers was from the 5,600 observations of first-division games in the Columbian league that were played between the year 2003 and 2010. The researchers used the matches that remained in the season from the point when the manager was dismissed and the point of the tournament where the team had reached before the dismissal of the manager to offer variation in the likelihood of the dismissal of the football manager.
The analysis by Giraldo et al., (2013, p.1) showed that the dismissal of a football manager did not result in a statistically significant effect on the performance of the team. The researchers determined this by analyzing the number of points per game earned by the new manager compared to the dismissed manager, the goal difference of the two managers, and the number of goals scored by the team during the reign of the two managers. These findings reiterated those reported by the other researchers in other leagues. Giraldo et al., (2013, p.1) used different variables to measure the performance of the manager. The appointment of a new manager due to the dismissal of the existing manager following a spate of poor performances could not improve the performance of the team on any of the measures or the general performance in a statistically significant manner.
Effect of Manager Turnover on the Team Performance in the Dutch and German League
ter Weel (2011, p.279) performed a study of the dismissals of managers in the Eredivisie between 1986 and 2004. The aim of the study was to determine whether there was any significant impact on the team performance following the turnover of the managers. The scholar found that the turnover of the football managers in the teams in the Eredivisie did not result in any statistically significant enhancement in the performance of the teams. With regards to the reason behind the dismissal of the managers, ter Weel (2011, p.279) found that the quality of the manager was not a significant factor in determining their dismissal. The implication is that even quality managers could be dismissed if the teams recorded a dismal performance.
The analysis of the effect manager turnover in the Bundesliga by Heuer, Müller, Rubner, Hagemann & Strauss (2011) showed similar results. Any improvement in the performance of the team by the new manager is only short-term. More precisely, Heuer et al., (2011) found that the performances retrogressed those recorded by the dismissed manager soon after the new manager took reigns of the team. These findings confirm those reported by the previous researchers. The findings are also consistent across different sporting activities and leagues in different countries.
Anticipated Research Topic
The cause and effect of manager turnover on the performance of sports teams
Aim
Research Objectives
References
Bell, A., Brooks, C. and Markham, T. (2013) The performance of football club managers: skill or luck? Economics & Finance Research: An Open Access Journal, 1(3) pp. 19-30.
Burt, D. 2007. Mourinho picks up £18m and prepares to depart England, The Independent, 22 September. Available at http://www.independent.co.uk/sport/football/news-and- comment/ mourinho-picks-up-pound18m-and-prepares-to-depart-england-403153.html [Accessed 21 May 2016].
De Paola, M. and Scoppa, V. (2012) The effects if managerial turnover evidence from coach dismissals in Italian soccer teams, Journal of Sports Economics, 13(2) pp. 152-168.
Fifield, D. 2010. Carlo Ancelotti gets Chelsea backing despite miserable run, The Guardian, 29 December. Available format http://www.guardian.co.uk/football/2010/dec/29/carlo-ancelottichelsea-backing [Accessed 21 May 2016].
Giraldo, A., Mendoza, J., Rosas, A., and Tellez, D. (2013) Managerial Turnover: Coach Dismissals and Team Performance in Colombia. Universitas Economica. 13(5) pp. 1-23.
Heckman, J. and Smith, J. (1999) The pre-programme earnings dip and the determinants of participation in a social programme. Implications for simple program evaluation strategies. The Economic Journal, 109 p. 313-348.
Herbert, I. (2010) Benitez gives £96,000 to Hillsborough families, The Independent, 11 June 2010. Available at http://www.independent.co.uk/sport/football/premier-league/benitez- gives 16396000-tohillsborough-families-1997094.html [Accessed 21 May 2016].
Heuer, A., Müller, C., Rubner, O., Hagemann, N., and Strauss, B. (2011) Usefulness of Dismissing and Changing the Coach in Professional Soccer, PLoS ONE, 6(3): e17664.
Talentowski, B. (2010) "You're Fired! The Cause and Effect of Managerial Turnover on Team Performance: A Study of Major League Baseball, The Park Place Economist: 18 (1) pp. 61-68.
ter Weel, B. (2011) Does Manager Turnover Improve Firm Performance? Evidence from Dutch Soccer, 1996-2004. De Economist, 159(3) pp. 279-303.
